Real Estate Ontario Residential Income Property Financing: Part 2 of 3 - Real-Estate London, Toronto, Montreal, Vancouver, Canada buy house, sell house , rent a house

Welcome to the second segment of a three-part series about income property. In this second segment we will be discussing financing options for residential income properties as well as the upside (and downside) of owning this type of property.

Financing options for residential income property vary widely from commercial or industrial properties. For one thing, most private lenders place size requirements on the apartment complexes they are willing to finance, usually five units or more. Smaller complexes just don't have the revenue generation potential required to make your loan officer feel comfortable.

The good news is that residential income property loans usually carry a higher LTV ratio than other property types. If you recall from the first segment of this series, LTV (loan-to-value) ratio indicates the percentage of money your lender will lend you to the property's market value. An 80% LTV is the maximum most lenders will provide for residential income property.

Loan terms usually range from 25 to 30 years with a maximum loan amount of up to $3 million. Current competitive interest rates can range from 4.70% up to 6.625% depending on several factors including your credit rating and the size of your down payment.

Most loans for residential income property are termed as 'recourse loans'. This means that the lender has 'recourse' to your personal assets in the event you default on the loan. Needless to say, you need to make sure you are ready to assume the financial responsibility of making your payments in a timely fashion.

Besides financial responsibility, residential income property management brings with it other unique challenges. Likewise, it demands certain skills above and beyond investment savvy and experience. To successfully manage your residential income property, you'll need a good combination of street smarts, interpersonal, and handyman skills.

More than any other income property type, residential property will bring you into close contact with those renting or leasing your property. Possibly the most important part is screening those you rent to. Background checks, calls to previous landlords, and searching interviews can save you a lot of headache and money down the road.

It's likely that at some point in the tenancy something will break or malfunction. If you have the ability to replace windows or wiring, know how to fix an A/C or refrigerator, or have rudimentary plumbing skills, chances are you will save some money by performing these tasks yourself.

Sometimes dealing with tenants can be the hardest part of owning residential income property. How well can you deal with angry, demanding people? Do you stay cool, calm, and collected in tense interpersonal situations? If so, you'll be prepared to deal with some of the issues likely to crop up during your management experience.

It's important to keep your goals in sight when managing a residential income property. Sometimes it's easy to get bogged down in the day-to-day duties of running the property that you lose sight of making a profit. Know your rights as a landlord; know your bottom line as an investor. As with any investment, having an accurate idea of your time horizon will, to a large extent, dictate the amount of effort and money you should put into your income property.

London Ontario Real Estate Information

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TORONTO, ONTARIO-- - InnVest Real Estate Investment Trust announced today that a distribution of $0.0333 per stapled unit, payable on June 15, 2012, has been declared to the holders of record as at the close of business May 31, 2012. The distribution is $0.0333 per unit of InnVest Real Estate Investment ...

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TORONTO, ONTARIO-- - Allied Properties REIT announced today that the Trustees of the REIT have declared a distribution of $0.11 per unit for the month of May, 2012, representing $1.32 per unit on an annualized basis. The distribution will be payable on June 15, 2012, to unitholders of record as at May ...

TORONTO, ONTARIO-- - Allied Properties REIT announced today that it has entered into an agreement to purchase the following property for $61.75 million: Address Total Office Retail Parking GLA GLA GLA Spaces ---------------------------------------------------------------------------- Lang Tannery ...

TORONTO, ONTARIO-- - Canadian Real Estate Investment Trust announced it has acquired an additional 25% interest in certain components of Dartmouth Crossing Shopping Centre located in Dartmouth, Nova Scotia, ...

TORONTO, ONTARIO-- - Canadian Real Estate Investment Trust today announced its May 2012 monthly distribution in the amount of 12.42 cents per unit . The May distribution will be payable on June 14, 2012 to Unitholders of record May 31, 2012.CREIT is a real estate investment trust focused on accumulating ...

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Residential Income Property Financing: Part 2 of 3

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